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Tories demand pre-Budget debate Tories demand pre-Budget debate
(29 minutes later)
The Conservatives are calling for a full parliamentary debate on the pre-Budget report as attention turns to how many people will gain or lose from it.The Conservatives are calling for a full parliamentary debate on the pre-Budget report as attention turns to how many people will gain or lose from it.
The Tories say Monday's statement was a Budget in all but name and needs every bit as much parliamentary scrutiny.The Tories say Monday's statement was a Budget in all but name and needs every bit as much parliamentary scrutiny.
There is close to a consensus that many people will experience short-term gain from next week's cut in VAT.There is close to a consensus that many people will experience short-term gain from next week's cut in VAT.
But shadow chancellor George Osborne told the BBC the government was taking "huge risks" with public finances.But shadow chancellor George Osborne told the BBC the government was taking "huge risks" with public finances.
And the Tories argue more people will lose out under a National Insurance rise in 2011 than the government says.And the Tories argue more people will lose out under a National Insurance rise in 2011 than the government says.
In his report, Chancellor Alistair Darling unveiled plans for record borrowing and VAT cuts to try to stave off a long recession.In his report, Chancellor Alistair Darling unveiled plans for record borrowing and VAT cuts to try to stave off a long recession.
He said VAT would be cut from 17.5% to 15% from next Monday for 13 months, in an effort to boost spending. KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners At-a-glance: Pre-Budget reportAnalysis: A political budgetHe said VAT would be cut from 17.5% to 15% from next Monday for 13 months, in an effort to boost spending. KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners At-a-glance: Pre-Budget reportAnalysis: A political budget
But he also said that from 2011, National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000.But he also said that from 2011, National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000.
The Tories say people earning £20,000 and above will be worse off partly as a result of the National Insurance increase.The Tories say people earning £20,000 and above will be worse off partly as a result of the National Insurance increase.
The government says only those on incomes of £40,000 and above will lose out.The government says only those on incomes of £40,000 and above will lose out.
But Mr Osborne said the UK faced a "trillion-pound" public debt under Mr Darling's plans.But Mr Osborne said the UK faced a "trillion-pound" public debt under Mr Darling's plans.
He told BBC Radio 4's Today programme: "I think there was a big intake of breath by the nation when they realised what the cost of the last 10 years was and that we are all saddled with a truly huge debt."He told BBC Radio 4's Today programme: "I think there was a big intake of breath by the nation when they realised what the cost of the last 10 years was and that we are all saddled with a truly huge debt."
He also said: "They are taking a huge risk with the public finances."He also said: "They are taking a huge risk with the public finances."
Mr Darling told Labour backbenchers on Monday night that he agreed with Mr Osborne on one thing - that voters would now face a stark political choice at the next election.Mr Darling told Labour backbenchers on Monday night that he agreed with Mr Osborne on one thing - that voters would now face a stark political choice at the next election.
The government is gambling that a huge increase in borrowing will diminish the downturn, but if it gets it wrong, it is Labour's election prospects, as much as the economy, that will suffer.The government is gambling that a huge increase in borrowing will diminish the downturn, but if it gets it wrong, it is Labour's election prospects, as much as the economy, that will suffer.
The chancellor outlined plans to double the national debt - borrowing is set to reach £118bn by the end of 2009, before starting to come down - with the books not to be balanced again until 2015/16. We don't think it's going to work and we don't think it's affordable Phillip Hammond, shadow chief secretary to the TreasuryThe chancellor outlined plans to double the national debt - borrowing is set to reach £118bn by the end of 2009, before starting to come down - with the books not to be balanced again until 2015/16. We don't think it's going to work and we don't think it's affordable Phillip Hammond, shadow chief secretary to the Treasury
Mr Darling also slashed economic growth forecasts for next year from 2.75% to between minus 0.75% and minus 1.25% - the biggest downward revision on record.Mr Darling also slashed economic growth forecasts for next year from 2.75% to between minus 0.75% and minus 1.25% - the biggest downward revision on record.
The pre-Budget report also contained announcements of a duty rise on alcohol, tobacco and petrol duty, to cancel out the effect of the VAT reduction.The pre-Budget report also contained announcements of a duty rise on alcohol, tobacco and petrol duty, to cancel out the effect of the VAT reduction.
Mr Darling told MPs: "If we did nothing, we would have a deeper and longer recession that would cost the country more in the long term." Mr Osborne said that the rise in National Insurance contributions was a tax on the jobs and incomes of middle Britain and Mr Darling was trying to borrow his way out of debt.
He said in "extraordinary circumstances" allowing borrowing to rise was right to "ensure that there is extra money flowing into the economy when it is needed most, but we can reduce borrowing when growth returns".
Shadow chancellor Mr Osborne said that the rise in National Insurance contributions was a tax on the jobs and incomes of middle Britain and Mr Darling was trying to borrow his way out of debt.
Speaking about the package of measures, the shadow chief secretary to the Treasury, Phillip Hammond, told the BBC: "We don't think it's going to work and we don't think it's affordable.Speaking about the package of measures, the shadow chief secretary to the Treasury, Phillip Hammond, told the BBC: "We don't think it's going to work and we don't think it's affordable.
"What we do know is that anybody on an income of £20,000 or more is going to pay for this reckless gamble through higher taxes after the general election throughout the next Parliament." PRE-BUDGET REPORT Report in full Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader. Download the reader here"What we do know is that anybody on an income of £20,000 or more is going to pay for this reckless gamble through higher taxes after the general election throughout the next Parliament." PRE-BUDGET REPORT Report in full Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader. Download the reader here
For the Liberal Democrats, Vince Cable said the measures did not go far enough and he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost.For the Liberal Democrats, Vince Cable said the measures did not go far enough and he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost.
"What I fail to see is how the economy gets a major stimulus for, for example, a £5 cut in a £220 imported flat screen television or a 50p cut in a £25 restaurant bill," he said."What I fail to see is how the economy gets a major stimulus for, for example, a £5 cut in a £220 imported flat screen television or a 50p cut in a £25 restaurant bill," he said.
He told the BBC the build-up to the pre-Budget report had given people the implication there would be temporary tax cuts to be financed "by very wealthy people".He told the BBC the build-up to the pre-Budget report had given people the implication there would be temporary tax cuts to be financed "by very wealthy people".
But he added: "The package is nothing of the kind. The people who are going to have to pay for this are people who pay National Insurance."But he added: "The package is nothing of the kind. The people who are going to have to pay for this are people who pay National Insurance."